Financial support for Muslim students

Islamic Sharia law prohibits "Riba"  the paying and receiving of
interest for profit. The prohibition can apply to excessive or
unreasonable interest, but may also include the commercial rate of
interest paid on a Professional Career Development Loan, bank overdraft
or credit card.

Sometimes the inflation-only interest that is paid on
student loans for undergraduates and postgraduates is seen as Riba
(although not all Islamic scholars share this view).

Sharia-compliant financing

Some financial organisations do offer Sharia-compliant financial
services. They guarantee that money held in these accounts is not
invested in industries such as gambling, alcohol or weapons
manufacturing. For more information on these particular products, visit
the banks' websites:

Government loans

Eligible undergraduate students can receive a tuition fee loan and
maintenance loan from the UK government under the student finance
system. For pre-2012 entry undergraduates, these loans incur
interest on the repayments, but this is currently set at the rate of
inflation (not at a commercial rate). In effect the value of the amount
repaid is the same as the value of the amount borrowed.

For 2012 entry undergraduates onwards, interest on student
finance is charged at the rate of inflation plus 3% during the period of
study. The interest rate then varies after graduation, between the rate
of inflation only and inflation plus 3%, according to earnings.

The postgraduate loan for Masters degrees will be subject to a rate of
interest (the rate of inflation plus 3%). This interest will start to
accrue from the date that you receive your first instalment.

In addition to the Postgraduate loans, the government launched a separate Doctoral loans system in 2018. The Doctoral loan will be subject to a rate of interest (the rate of inflation plus 3%. For more information about the scheme visit our government postgraduate doctoral loans page..

Islamic opinion is divided on whether 'inflation only' interest
constitutes Riba. Some people believe that repaying exactly the same
amount that was given as a loan is acceptable. Others believe that it is
acceptable if the amount repaid has the same purchasing power as the
amount that was originally borrowed (as in inflation-only based
interest).

The National Union of Students (NUS) and the Federation of Student
Islamic Societies (FOSIS) have been working together to produce an
alternative student finance system that is equitable for Muslim students
and is acceptable under scriptural law. The government announced that
Muslim students in England will be able to access an alternative student
finance system which is compatible with Sharia law. The HE and Research Bill 2016 permits the Secretary of State to award students the Sharia compliant product (alternative payment - neither grant or loan) but at the time of writing, no date has yet been set for when this system will be available.

Other loans for study

Some other loans for study attract a commercial rate of interest.
For example, some students may need to take a Professional and Career
Development Loan (PCDL) or other form of bank loan to fund their studies
(especially for postgraduate study).

Again, Islamic opinion is divided. Some people believe that this is
not Sharia-compliant, while others believe that if such a loan is
crucial to a student accessing education, then it can be.

Leeds Financial Support

The Leeds Financial Support (LFS) package is non repayable support from the University that (for full time undergraduate students) requires you to have been means tested by the Student Loans Company (SLC) but does not require that you take out a loan. Find out more about Leeds Financial Support eligibility criteria, qualifying income thresholds and information for part time students

Alternatives and consequences

Please note that if you decide not to take a loan for your studies
for faith reasons, there is probably no specific Sharia-compliant
alternative that is comparable to the government student finance system
available at the moment. Moreover, not taking the loan may have an
effect on your eligibility for other sources of funding:

the Access to Learning Fund (a University fund that helps
students facing financial hardship) only accepts applications from
undergraduates who have taken their full maintenance loan entitlement,
and from postgraduates who have made provision to pay their tuition fees
and basic living costs

banks often require evidence of an undergraduate maintenance loan before opening a student account with an interest-free overdraft facility

some trusts and charities may specifically exclude students who
are entitled to an undergraduate maintenance loan, whether they have taken it or not

if you are entitled to claim welfare benefits as a student, the
Benefits Agency will assume you have taken your loan entitlement and
will reduce your benefit entitlement accordingly

if you are unable to take out a loan for faith reasons there are limited other options available, therefore we would advise you to talk to your religious leader and ask for advice

if you decide not to take out a loan but have already been paid, it is not too late to cancel any future payments; you can also return what you have already received but you will be charged interest on any money borrowed for the time you had it. Please seek advice from Student Finance England (or the equivalent body) before cancelling any loan payments and to understand what the implications are in terms of the money that you will owe.